OM-8.1 OM-8.1 Introduction [1 April 2008 to 30 September 2012]
OM-8.1.1
Section CA-6.2 of the Capital Adequacy Module allows banks to use either the basic indicator approach or standardised approach to compute capital charge for operational risk. This chapter sets out the qualitative aspect of these two approaches.
Added: April 08OM-8.1.2
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events which includes but is not limited to, legal risk and Shariah compliance risk. This definition excludes strategic and reputational risk.
Added: April 08OM-8.1.3
Shariah compliance risk is a type of operational risk facing Islamic banks which can lead to non-recognition of income and resultant losses. See Appendix OM-1 for examples of Shariah requirements that must be complied with by the banks.
Added: April 08
